A New Pension Bill in Romania

Labour Minister Lia Olguta Vasilescu

In terms of purchasing power, the average salary in Romania accounts for approximately two thirds of the European average, but the average pension is way smaller, namely one third of the average in Europe. According to Adrian Mitroi, a professor with the Academy of Economic Studies in Bucharest, quoted by Agerpres news agency, a modern society must ensure a proper standard of living also for those who are retired. Despite lots of counterarguments, in a normal economy, the specialist says, pensions must increase, just like salaries.

Against this background, the left-wing Government formed by the Social Democratic Party and the Alliance of Liberals and Democrats has drafted a new pension law for the public sector, which, if adopted, would come into force in stages, until 2021. Published on the Labour Ministry's website, the new pension bill stipulates higher pensions. But, most importantly, the new law is aimed at eliminating inequities that exist in the system. There are many citizens who have contributed equally to the pension fund, but they receive different amounts of money. Also, there are big gaps between men and women.

That is why, under the new law, pensions will be paid only depending on each individual's contribution, and those who have the same seniority, but retired at different moments in time, will get the same amount. The value of the pension point would grow by 70% until 2021, from approximately 234 Euro as it is today. The bill also includes provisions for those who have contributed a minimum of 15 years; they will be able to chose between the minimum guaranteed pension, calculated in keeping with their contribution, and a social benefit.

The women who have worked 15 years and have given birth to three children, whom they have raised until the age of 16, are entitled to a reduction in the retirement age of 6 years. Also, mothers with more than three children will benefit for another one year reduction for each child. Another important provision is that concerning citizens who have master's and PhD degrees, as this will too add money to their pensions.

The Government has stated that no pension will drop, even if, after recalculation, the amount would be smaller. Debates in Parliament are due to start next month, for the law to come into force on January 1st 2019, which would mean that some 5 million pensioners would receive higher pensions. Until then, the bill will be under public debate for 30 days, and suggestions can be submitted to the Labour Ministry by August 18th.

However, trust in the pension system alone, no matter how generous and fair that may be, is not enough. Specialists believe that any active person should take time and think in advance of what they can do in order to ensure a higher purchasing power for themselves and to protect their assets and incomes, so that they can benefit from a decent standard of living even whey they retire. So, a public pension should ideally be complemented by other financial alternatives.